How is an operating budget related to a balanced budget?

An operating budget outlines the expected revenues and expenses for a specific period, typically one year, focusing on day-to-day operations. A balanced budget occurs when total revenues equal total expenses, meaning the organization does not incur a deficit. Therefore, an operating budget is a tool used to achieve a balanced budget by ensuring that planned expenditures do not exceed projected income. Ultimately, a balanced budget reflects effective financial management within the framework of the operating budget.